Several of the world’s fastest-growing economies face the largest financial threats from natural disasters fueled by climate change, according to the new Natural Hazards Risk Atlas.
The study, released by risk analysis company Maplecroft, evaluated the risks posed to 197 countries across 29 risk indices and physical exposure to 12 different natural hazards. Maplecroft found 30 countries in extreme risk.
Water, Water Everywhere
India, Bangladesh, the Philippines, Myanmar, Laos, and Vietnam are among the ten countries with the greatest proportion of their economic output threatened by natural disasters. Risk in these countries is focused on one factor: most of their major cities and commercial hubs are located along coastlines or low-lying areas prone to flooding as sea levels rise and at risk of stronger storms fueled by warmer water and air temperatures.
Beyond simple economic risks caused by supply chain breaks, infrastructure damage, and market disruptions, Maplecroft found these countries at risk of political disruption. Large-scale natural disasters exacerbate the risk of societal unrest, food security, corruption, and rule of law.
“High exposure to natural hazards in these countries are compounded by a lack of resilience,” said Helen Hodge, Maplecroft’s Head of Maps and Indices. “The occurrence of a major event would be very likely to have significant impacts on total economic output of these countries as well as foreign business.”
Resilience Outranks Risk
While developing economies have the greatest proportion of their economies at risk, they’re not alone. Maplecroft found major economies like Taiwan, Japan, China, Brazil, and Mexico have the largest total economic exposure to natural disaster in absolute terms. However, these countries have a far greater capacity to recover from disaster due to resilience factors like economic strength, strong governments, disaster preparedness, and building regulations.
These factors are largely absent in developing economies, meaning they take much longer to bounce back, if at all. While the highest-risk countries have booming economies, they are fueled by poor populations who live on marginal lands like flood plains in insecure housing, without adequate resources to re-establish their lives after a major event.
Cases In Point
The “bounce-back” capability differences between developed and developing countries in Asia is evident in the cases of Japan and Thailand. One year after the fourth-largest earthquake and resulting tsunami, Japan’s economy has largely returned to pre-disaster economic output levels and growth forecasts. 2011 floods in Thailand, however, wiped away nine percent of the country’s gross domestic product and heavily damaged infrastructure, which remains largely unrepaired.
Maplecroft’s report follows several other reports detailing the climbing costs of climate change to create a chorus of warnings for anyone who cares to listen. The Asian Development Bank recently estimated the Asia-Pacific region needs to spend $40 billion per year to “climate proof” its economies against global warming impacts, and at $110 billion, 2011 was the costliest year ever for insurers.